Bankruptcy can i lose my house

Otherwise, you'll need to be able to protect your equity with a bankruptcy exemption to avoid losing the home in Chapter 7 bankruptcy. Learn more about filing for bankruptcy if you have equity in your home. State exemption statutes list the property its residents can protect in bankruptcy.

Some states allow residents to choose between either the state exemption list or the federal bankruptcy exemption scheme. Either way, almost all states allow residents to protect some home equity with a homestead exemption. You might be able to exempt even more with a wildcard exemption. If your exemptions adequately cover your equity, the trustee won't sell your home in a Chapter 7 bankruptcy.

However, if your exemptions protect only a portion of it, the trustee will sell the house, pay off the mortgage, give you the amount you're entitled to exempt, and use the remainder of the sales proceeds to pay creditors. Keep in mind that the trustee will take into account the costs to sell the home. If, after deducting sales costs, the amount remaining isn't enough to make a meaningful payment to creditors, the trustee will abandon the property and you'll get to keep it.

Learn more about your home in Chapter 7 bankruptcy. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site. The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service.

Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Grow Your Legal Practice. Meet the Editors. In many cases you can keep your home in Chapter 7 bankruptcy. Learn more here. Whether you can keep your home after filing for Chapter 7 bankruptcy will depend on the following factors: whether your mortgage is current if you'll be able to continue making the payments after bankruptcy how much equity you can protect with a homestead exemption, and the amount of equity in your home.

Your Home and the Chapter 7 Bankruptcy Trustee Chapters 7 and 13 work very differently, so it's important to understand what to expect—especially if you want to keep valuable property in Chapter 7. Are Your House Payments Current? Why filing won't cure a default. Trustees will typically sell the home in a timely fashion.

Generally, an individual remains bankrupt for 3 years. This allows 9 years to arrange the sale. If the trustee does not sell the home within this period, ownership of the home could be returned to the individual.

The 6 year rule only applies if the trustee is aware the home exists. If a home is not disclosed in the bankruptcy documents, the trustee will have 20 years to take possession and sell the home. Usually, if you are bankrupt, you are not expected to immediately move out of your home. In normal circumstances, the trustee will give you a few weeks to make alternative arrangements. In some cases, the trustee may allow you to stay in your home during the selling period, provided you assist with the sale process, contribute a fair rent and maintain the home.

If you are the only owner of your home, your secured debts for example, a mortgage are paid first out of the sale proceeds. The remainder of the sale proceeds are given to the trustee to pay your unsecured debts and trustee fees.

Any remaining funds after this distribution will be given back to you. If the home is owned by two people, your secured debt for example, a mortgage will still be repaid first.

However, any remaining funds will then be divided in proportion between both co-owners. The trustee can then use your portion to pay off your unsecured debts. The home is held between Adam the bankrupt and Mary the non-bankrupt co-owner as joint tenants in equal shares i.

This resource was published September This is legal information only and does not constitute legal advice. You should always contact a lawyer for advice specific to your situation. Home Resources What happens to the family home during bankruptcy? The family home and bankruptcy This fact sheet explains what can happen to a family home when you or a co-owner become bankrupt. Updated 20 September Impact of COVID In line with the current nationwide moratorium on evictions, trustees of bankrupt estates have been encouraged to consider avoiding evicting people who are COVID affected from properties to enable sale.

This fact sheet covers: What is bankruptcy? Under what circumstances will a home be sold in bankruptcy? What is the process for selling a home during bankruptcy? Things to be aware of during the sale process What happens after my home is sold? If you own the home you live in, the official receiver or bankruptcy trustee may want to sell it to help pay your bankruptcy debts. This applies whether your home is freehold or leasehold, and whether you own it on your own or jointly with another person.

You mustn't give away your home to another person or sell it for less than it's worth to try to avoid the official receiver selling it. They might stop paying you SMI. Contact your nearest Citizens Advice if you need help working out how to afford your mortgage. Get legal advice if you have creditors in the EU - find free or affordable legal help. If you have family or dependants living in your home, it may be possible for a sale to be put off for a year, to give you time to make other living arrangements.

You may be able to stop your home from being sold if your partner, spouse, relative or friend will agree to buy your share of it. This share is called your beneficial interest. It is the amount of money you would get if you sold your home after anything secured on it, for example mortgages or loans, have been taken off. It is different to the legal title to the property, which is held by whoever owns it. If you're the sole owner , your beneficial interest is normally the whole value of the property, minus anything secured on it.

If you own the property jointly , the amount of your beneficial interest is normally this amount shared equally between you and the other owners. It's important to remember that you can't just sign over your share of your home to someone else to avoid it being sold. This is a bankruptcy offence. If the official receiver finds out you've done this, you could have a bankruptcy restrictions order made against you, be fined, or even sent to prison. If you want to sell your share, you need to do it at market value.

If your home is in negative equity, then you may be able to keep it. At two years and three months after the bankruptcy order is made, the situation will be reviewed. The official receiver or trustee has three years to take action in relation to your home. Your interest in your home will become yours again if they haven't done any of the following within three years from the date your bankruptcy order was made:. If you rent your home, it's unlikely you'll lose it by going bankrupt.

However, there are certain situations where your home may be at risk, including:.